Anyone who knows me, or even stalks me on twitter, knows that I hate renting. It was just last month that I got a message from my landlord. She called one evening when I was watching a movie and I didn’t bother to answer. I knew she would leave a message if it were important. As it turns out, “important” is a relative term for her.
She was calling to let me know that one of the three tenants had been making a mess with our garbage cans. Not only was there loose trash in them that the garbage men (yes, they are men) would not take, but it became the new homes of hundreds of flies. While I wasn’t a fan, I knew it wasn’t my fault. Anyways, she called to tell us her new plan to change the cleanliness of the garbage cans. She decided that I was going to have to clean out a garbage can that would from there on out become “my” garbage can.
To make a long story short, I called and let her know that I wouldn’t be doing this and that she would have to clean them out first is she wanted us to be assigned to a garbage can. She agreed, but the annoyance of renting continues to nag at me through these renting moments.
As many of you know, my wife and I planning to buy our first home in about two years. We are already saving up a down payment and figuring out how much of a house we can afford. You know, all the things that young adults SHOULD do when buying their first home. Who wouldn’t want to be prepared? Yet, as I make the preparations and plans, I can’t help but wonder if my hatred for renting is causing me to jump into home ownership for all the wrong reasons. That led me to question what the good reasons are for buying a home and what the bad ones are. If you are looking to buy a home, or have just recently purchased your first home, you may want to think whether it is/was for the right reasons.
Bad Reasons to Buy a Home
Being the youngest of three boys, I have always wanted to grow up faster than anyone else my age. I am more responsible than anyone else I know and I plan like no one else. In many ways, it’s a good thing. It has helped me be successful in all of my employment opportunities. While my peers were working as student works, I was a full-time staff member. I not only got benefits, including vacation and holidays, but also free tuition. Simple put, my motivation has been a good thing in so many ways.
Many people take the same drive to be a grown up and carry it over to buying a home. In other words, many people buy their first home because it seems like the “grown-up thing to do.” While I am a fan of buying a home, I do not endorse buying a home for the wrong reason. This is one of those bad reasons. Buying a home to feel grown up will often mean that you are buying before you are ready (both financially and emotionally). You need to consider the financial and lifestyle changes of buying a home.
Here are some other bad reasons to buy your first home:
- To have more space or a certain feature of what is often associated with buying (i.e. a backyard, garage, etc.)
- You assume it’s better financially
- You’ve been told the market is a buyer’s market
- You don’t want to miss out on low interest rates
There are many other reasons not to buy a home. The easiest indicator of whether you are making a mistake seems to be making too a decision without thinking it through. This should come to us as no surprise. The aspect of considering all of your options, which is great advice for your personal finances in general, is going to apply to buying your first home. In other words, the message here is this: don’t jump into buying a home without knowing the reasons why you are buying.
Is Hatred for Renting a Bad Reason to Buy a Home?
The implications of thinking through why you are buying a house would suggest that buying a home for the sole purpose of not having to deal with a landlord is indeed a bad decision. You shouldn’t run to buy a home because you can’t stand dealing with a landlord. First, you need to consider renting somewhere else. There are lots of great landlords out there and if you are considering buying a home for the sole purpose of escaping that landlord, you’re confused. There will be more issues that you, as a homeowner, will have to deal with.
Reasons We Will Buy a Home
While my wife and I hate renting, this isn’t the only reason why we are buying a home. Here are some of the other reasons we want to buy a home, that I think make for good reasons to buy. You’ll have the option in the comment section below to tell me whether we are buying for the right reason or not.
- Building Up Equity – Equity in a home is a great way to build wealth. Instead of paying a monthly fee for renting, by buying a home we would be putting money into our own pocket. Equity isn’t just about net worth either. By buying this asset, we are increasing our wealth AND lowering our future expenses (once the mortgage is paid off). Who wants to pay rent forever anyway? The financial benefits are certainly the biggest reason for us to buy a home.
- Diversification – Buying a home allows us to invest in something different than our retirement accounts. When most people talk about diversification and how to do it, they don’t talk about real estate or buying a home. Diversifying your investments/assets is a great way to hedge against downward spirals in the market. Granted, it will initially put a lot of our money in a home, but if the stock market crashes, at least we will have value in our home.
- Responsibility – Like I already mentioned, I enjoy being responsible for things. I want to manage and take care of my own home. There’s something about successfully managing an asset that just excites me. On top of that, I know that since I am the one responsible, I don’t have to wait for my landlord to fix something or to go cheap on something because I will be the “landlord.” I will be the one who makes all the decisions (or Mrs. 20’s will be, at least).
Buying a home is something that needs to be done for the right reason. Jumping the gun, so to speak, is a great way to put yourself at increased risk of causing a financial disaster. If you are thinking about buying a home, make sure to take the time to think about why you want to buy. Ask yourselves whether you can afford it AND whether you are ready for that type of commitment.
Readers, what do you think are good reasons to buy a home? Am I buying a home for the right reasons?